Credit/Debit cards - the next welfare for lawyers action.

May 11 03:08 UTC 2002

The next big legal battle is being set up.  On one side is
the credit card companies. On the other side is merchant
organizations and large retail chains (Walmart, Target, Walgreens).

From a consumer perspective a MasterCharge/Visa/Debit card works
like a charm. You can specify how you want to use it and it
eliminates the time hassle of writing a check.  

The merchants like the lack of time wasted and the protection 
such a card gives them over a check.

The credit card companies of course like the credit cards because
of the interest and fees they accumulate from a captive customer.
BUT wait, there's more...Many folk are not aware that it costs the
merchant at least 2% (sometimes 2.5%) of each and every credit 
card purchase called 'merchant fees'.  So the credit card
company takes a cut off both ends of the deal, both the buy and the
sell.  (Stock brokers like to do the same thing - an item about
the large brokerage 'clearing' systems may follow)

In a low percentage business like retail and with the stagnant
economy the merchants are starting to look harder at this 2-3%
of their revenue that they send to the credit card companies.
(Some places like gas stations tried to offer a discount for
cash purchases - ain't seen that in awhile have yah.)  Some
smaller businesses (chinese especially) have always violated
their merchant agreements by charging the merchant fee on top-
and of course there is no comparison between a purchase that
is 'on the books' as it were and a 'cash deal'...

But now the big boys are starting to weigh in.  Chains have
started to have the credit card swipe machines ask if the
customer would like to use pin# if a credit/debit card is
swiped.  Soon, a 'discount' will be offered for the debit
purchase.  The credit card companies don't like this
because it threatens their business.

The way it works when you use the debit card function is
that your bank account is automatically debited for the
cost of the purchase.  To you it is exactly the same.
Hoever, and here is where it gets interesting, the 
credit card company can only charge the merchant a flat
fee on a sliding scale with the second highest fee set
well above the usual consumer debit card purchase.  Typically
in the largest chains this transaction fee is as little as
25 cents per purchase, not 2% of the total purchase.  

You do the math.  Its a significant portion of revenue 
stream from that market segment at risk, and its a big market
segment right now (sale of big ticket items are down in general
and credit card use for those items is down as well, folk are
starting to pay cash).

The credit card companies are staking out their position and
threatening litigation and the merchants have fired the first
shot across the bow.  The lawyers are standing in the wings
waiting for battle to begin.  So what is the consumer to do?

Take the discount if offered on small ticket items. BUT, and
its a big one, use the credit card for larger purchases.  One
of the things that a credit card use offers the consumer as
opposed to the same card used as a debit card is a lot more
legal protections.  Let the two elephants fight it out and
go about your business as usual.  If you do use the debit
fuction keep receipts and carefully compare the monthly 
statement to them.  It is a lot harder and take longer to
'reverse' a 'mistaken' double bill on a debit card than
a credit card.  On a credit card purchase you challenge to
your card provider service number (800 number on back of
card) and it is instantly credited and the merchant has to
prove up the charge within 30 days.  Good luck on challenging
a debit card double bill, it is incumbent on you to prove,
and take longer meanwhile the merchant has the use of your
money for that period of time.

response 2 of 30:

May 11 04:02 UTC 2002

I never have, and if I can avoid it, never will use my ATM card for debit 
purchases.  I only write checks for bills paid by mail, and I choose 
between credit and cash for all other purchses depending on the need and 
the documentation requirements.

response 4 of 30:

May 11 06:40 UTC 2002

re#1-3:  Sigh.  Thats part of the problem, so much FUD spread by
the credit card companies.

response 6 of 30:

May 11 08:43 UTC 2002

Like fudge, only from the other end.

response 8 of 30:

May 11 14:03 UTC 2002

Some bank's debit/credit cards, TCF in particular, charge a Point of Service
fee when you use the card as a debit card in a store.  Used to be $.25 per
transaction, it was raised a while ago, not sure exactly to what would have
to look at last statement.  They lump all such fees together per day with the
$1 they charge when using the card at ATM that isn't theirs and with whatever
the other ATM charges when the card isn't theirs.  Makes it hard to determine
exactly how much the fee is.

When they sent me the debit card I called and complained that it wouldn't be
protected in the same way that a credit card or straight ATM card was and that
I didn't want something that I was going to be charged extra fees to use. 
I was told that even using it as a debit card I would have the first $50
responsibility if lost or stolen and that "we don't and have no plans to
charge a fee to use it as a debit card".  And they didn't, for about 3 months.
They never notified me when they started charging the fee, I found out from
a clerk at a store when I went to use it.  She asked if I wanted to use it
as debit or credit, when I said debit she informed me that the bank would
charge me $.25 for that use.  I checked and sure enough they were.  When they
raised the fee I found out the same way, from a clerk not from the bank.

response 10 of 30:

May 12 00:55 UTC 2002

re#5

Fear, Uncertainty, Doubt.

response 12 of 30:

May 12 04:15 UTC 2002

Frank, is that really you?

response 14 of 30:

May 12 14:54 UTC 2002

re #12: ye that's really me.  finally was able to borrow a laptop from
the office.  close to discharge, i hope (poss Tues), will have to stay
local until dialysis slot opens up in PDX.  Damn I've missed being online.

x.

response 16 of 30:

May 12 18:50 UTC 2002

Re #14:  PDX?  Isn't that POrtland, OR?

response 18 of 30:

May 13 01:59 UTC 2002

Cool.  It's a nice place.

response 20 of 30:

May 13 16:29 UTC 2002

Re #1: I rarely get hit with an ATM terminal fee.  In fact, I've often made
ATM card debit purchases with cash back to *avoid* terminal fees.  This is
especially handy when you're on vacation in an area with no ATMs from your
bank -- even if the bank charges you a terminal fee, the store won't, so you
still come out ahead of using a standard ATM where *both* ends take a cut.

I do wish I could change my ATM/debit card back to a straight ATM card.  I
liked the idea of someone not being able to use the card without a PIN.  But
you can't do that anymore with most banks.

response 22 of 30:

May 13 18:32 UTC 2002

True, but I don't usually carry my checkbook, and a lot of stores won't take
out-of-town checks anyway.